Exhibit 10(h)(5)
AGREEMENT UPON SEPARATION OF EMPLOYMENT
This Agreement Upon Separation Of Employment ("Agreement") is made and
entered into by and between Xxxxxx X. Xxxxxxxx, his successors, heirs,
administrators, executors, personal representatives and assigns ("Xxxxxxxx")
and The Quaker Oats Company, its officers, directors, shareholders,
employees, agents, assigns, subsidiaries, divisions, parents, affiliates and
successors ("Quaker"), collectively "the parties." The Agreement shall
become effective seven (7) days after it is executed by Xxxxxxxx.
1. Economic Consideration to Xxxxxxxx
Upon becoming effective, this Agreement shall satisfy the Quaker
Officers Severance Program's (the "Program") prerequisites that in order to
qualify for Program benefits, an officer must execute a valid waiver and
release of all potential claims and must sign an agreement containing
several covenants, including a non-competition provision. In addition,
Xxxxxxxx shall receive the following consideration, to which he would not be
entitled in the absence of this Agreement:
X. Xxxxxxxx'x active employment with Quaker is terminating on
December 15, 1998. After severance payments under the Program have expired,
and subject to the provisions in Xxxxxxxxx 0, Xxxxxx shall pay Xxxxxxxx an
amount equal to one year of Program payments (i.e., final salary plus
average bonus). This sum shall be paid in equal semi-monthly installments
commencing as soon as payments to him under the Program expire, and
terminating on December 15, 2000. Payments under this paragraph 1(A) are
consideration for the covenants in paragraph 5, not for anything else.
B. As soon as Program benefits end and continuing through December
15, 2000, Quaker shall provide Xxxxxxxx with the same insurance coverage as
is provided under the Program. This benefit is part of the consideration
for the Waiver and Release in paragraph 3, and the Miscellaneous Agreements
in paragraph 4.
2. Termination of Employment
Xxxxxxxx understands and agrees that his active employment relationship
with Quaker, its parent companies, affiliates and successors, will be
permanently and irrevocably severed as of December 15, 1998. Xxxxxxxx
agrees he shall not apply or otherwise seek reinstatement or reemployment by
Quaker at any time, and that Quaker has no obligation, contractual or
otherwise, to rehire, reemploy or recall him in the future. Xxxxxxxx
further stipulates that this agreement is sufficient cause for Quaker to
deny any request for rescission, rehire, reemployment or recall.
Xxxxxxxx agrees that prior to the effective date of his termination
from active employment, he will return all Quaker property, including but
not limited to keys, office pass, credit cards, computers, office equipment,
sales records and data. Xxxxxxxx further agrees that within sixty (60) days
after his termination date, he will submit all outstanding expenses and
clear all advances and his personal advance account, if any.
3. Waiver & Release
X. Xxxxxxxx waives, releases and discharges Quaker from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys' fees and costs and participation in a class action lawsuit,
whether known or unknown, fixed or contingent, that he may have or claim to
have against Quaker as of the date this Agreement becomes effective.
Xxxxxxxx further covenants not to file a lawsuit or participate in a class
action lawsuit to assert such claims. Without limitation, Xxxxxxxx
specifically waives all claims for back pay, future pay or any other form of
compensation or income, except as provided below. This waiver includes but
is not limited to claims arising out of or in any way related to Xxxxxxxx'x
employment or termination of employment with Quaker, including age
discrimination claims under the Age Discrimination In Employment Act (as
amended), discrimination claims under Title VII of the Civil Rights Act of
1964 (as amended) or the Americans with Disabilities Act, claims for breach
of contract, and any other statutory or common law cause of action under
state, federal or local law.
However, Xxxxxxxx does not waive, release, discharge or covenant not to
xxx for enforcement of any rights or claims under this Agreement, nor ones
that arise out of conduct or omissions which occur entirely after the date
this Agreement becomes effective. In addition, he does not waive any rights
he may have as an employee on inactive status and/or as a former employee,
as the case may be, under any of Quaker's fringe benefit or incentive plans
(e.g., its pension plan, the Program, the Long Term Incentive Plan of 1990,
etc.), nor does he waive his right to payment for unused vacation, if any,
pursuant to Quaker's vacation policy. Notwithstanding anything to the
contrary in Paragraph 8 of this Agreement, such benefits shall continue to
be governed by the ERISA plans, contracts and/or Quaker policies that exist
independent of this Agreement.
B. Quaker waives, releases and discharges Xxxxxxxx from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys'fees and costs, that it may have or claim to have against Xxxxxxxx
as of the date this Agreement becomes effective; provided, this waiver,
release and discharge only apply to claims as to which Quaker's senior
officers were aware, on or before the effective date of this Agreement, of
all material facts necessary to establish Xxxxxxxx'x liability; and further
provided, Quaker does not waive, release, discharge or covenant not to xxx
for enforcement of any rights or claims that arise out of conduct or
omissions which occur entirely after the date this Agreement becomes
effective.
C. The parties stipulate that nothing contained in this Agreement
shall be construed as an admission by either of them of any liability,
wrongdoing or unlawful conduct. It is understood that both Quaker and
Xxxxxxxx deny any liability, wrongdoing or unlawful conduct, and each is
providing consideration for this waiver and release in order to resolve any
potential disputes between them amicably and to avoid the expense of
potential litigation.
4. Miscellaneous agreements
The covenants and agreements set forth in this paragraph shall remain
in effect until December 15, 2001. Covenants 4(A) and 4(B) are material
parts of this Agreement, so a material breach of either of them by Xxxxxxxx
would entitle Quaker, at its discretion, to rescind this Agreement, in
addition to any other legal or equitable remedies it might have for breach:
X. Xxxxxxxx shall provide accurate information or testimony or both in
connection with any legal matter if so requested by Quaker. He shall make
himself available upon request to provide such information and/or testimony,
in a formal and/or an informal setting in accordance with Quaker's request,
subject to reasonable accommodation of his schedule and reimbursement of
reasonable expenses, including reasonable and necessary attorney fees (if
independent legal counsel is reasonably necessary).
X. Xxxxxxxx shall cooperate with media requests for interviews
regarding his termination and/or Quaker, unless directed otherwise by Quaker
in a particular instance. He shall not disparage The Quaker Oats Company,its
products, or any of its directors, officers or employees in these interviews,
nor in any other private or public setting; provided, if Xxxxxxxx is
compelled to provide testimony under oath, he shall testify truthfully
without regard to whether his testimony is favorable or unfavorable to
Quaker, and such testimony shall be protected against claims under this
Agreement by the same privilege that would apply to a defamation claim.
C. The Quaker Oats Company, and any officer or director acting on its
behalf, shall answer all reference inquiries directed to The Quaker Oats
Company regarding Xxxxxxxx by stating only his positions held, compensation
and dates of employment. No additional information shall be provided unless
authorized in advance, in writing, by Xxxxxxxx. Xxxxxxxx agrees to direct
all requests for references from Quaker to the highest ranking Human
Resources officer within Quaker.
5. Prohibited Conduct
X. Xxxxxxxx covenants and agrees that through the dates set forth
below, he shall not engage in any of the following activities anywhere in
the world:
i. Non-competition. Xxxxxxxx shall not undertake any employment,
consulting position or ownership interest which involves his Participation
in the management of a business entity that markets, sells, distributes,
licenses or produces Covered Products, unless that business entity's sole
involvement with Covered Products is that it makes retail sales or consumes
Covered Products, without competing in any way against Quaker. This covenant
shall remain in effect until December 15, 2000.
a. "Participation" shall be construed broadly to include,
without limitation: (1) holding a position in which he directly manages such
a business entity; (2) holding a position in which anyone else who directly
manages such a business entity is in Xxxxxxxx'x reporting chain or chain-of-
command (regardless of the number of reporting levels between them); (3)
providing input, advice, guidance, or suggestions regarding the management
of such a business entity to anyone responsible therefor; (4) providing a
testimonial on behalf of such an operation or the product it produces; or
(5) doing anything else which falls within a common sense definition of the
term "participation," as used in the present context.
b. "Covered Products" means any product which falls into one
or more of the following categories, so long as Quaker is producing,
marketing, distributing, selling or licensing such product anywhere in the
world: sports beverages; thirst quenching beverages; hot cereals; ready-to-
eat cereals; pancake mixes; grain-based snacks; value-added rice products;
pancake syrup; value-added pasta products; dry pasta products; and items
Quaker produces for the food service market.
ii. Raiding Employees. Xxxxxxxx shall not in any way, directly or
indirectly (including through someone else acting on Xxxxxxxx'x
recommendation, suggestion, identification or advice), facilitate or solicit
any existing Quaker employee to leave the employment of Quaker or to accept
any position with any other company or corporation. This covenant shall
remain in effect until December 15, 2001. For purposes of this provision,
the following definitions apply:
a. "Existing Quaker employee" means someone: (1) who
is employed by Quaker on or before the date when Xxxxxxxx'x employment
terminates; (2) who is still employed by Quaker as of the date when the
facilitating act or solicitation takes place; and (3) who holds a manager,
director or officer level position at Quaker (or an equivalent position
based on job duties and/or Hay points, regardless of the employee's title).
b. The Terms "solicit" and "facilitate" shall be given the
ordinary, common sense meaning appropriate in the present context.
iii. Non-disclosure. Xxxxxxxx shall not use or disclose to anyone
any confidential information regarding Quaker. For purposes of this
provision, the term "confidential information" shall be construed as broadly
as Illinois law permits and shall include all non-public information
Xxxxxxxx acquired by virtue of his positions with Quaker which might be of
any value to a competitor or which might cause any economic loss (directly
or via loss of an opportunity) or substantial embarrassment to Quaker or
its customers, distributors or suppliers if disclosed. Examples of such
confidential information include, without limitation,non-public information
about Quaker's customers, suppliers, distributors and potential acquisition
targets; its business operations and structure; its product lines, formulas
and pricing; its processes, machines and inventions; its research and
know-how; its financial data; and its plans and strategies. This covenant
shall remain in effect until December 15, 2001.
B. In the event of a breach, threatened breach, or situation that
creates an inevitable breach of any term of this paragraph by Xxxxxxxx,
Quaker shall be entitled to an injunction compelling specific performance,
restraining any future violations and/or requiring affirmative acts to undo
or minimize the harm to Quaker,in addition to damages for any actual breach
that occurs.The parties stipulate and represent that breach of any provision
of this paragraph would cause irreparable injury to Quaker, for which there
would be no adequate remedy at law, due among other reasons to the
inherent difficulty of determining the precise causation for loss of
customers, confidential information and/or employees and of determining the
amount and ongoing effects of such losses.
C. In the event Xxxxxxxx breaches any term of this Paragraph 5,Quaker
shall have the option of seeking injunctive relief or canceling the
remaining payments due under paragraph 1(A) of this Agreement. Quaker's
right to terminate Program benefits is spelled out in the Program, and is
not affected by this provision.
D. In the event Quaker elects to pursue injunctive relief, then the
following rules shall apply:
i. While litigation over the requested injunction is pending,
Quaker may, in its discretion, withhold payments otherwise due to Xxxxxxxx
under paragraph 1(A); provided, Quaker's right to terminate or suspend
Program benefits,which are separate from the benefits described in paragraph
1(A), is spelled out in the Program and is not affected by this provision.
ii. If, at the conclusion of the litigation, Quaker successfully
obtains full injunctive enforcement of all provisions in this paragraph 5
that it attempts to enforce, then Quaker shall pay Xxxxxxxx all amounts
otherwise due under paragraph 1(A) that were withheld and shall resume
making all payments required under paragraph 1(A), and shall likewise pay
all Program payments that were withheld.
iii. If, at the conclusion of the litigation, Quaker obtains some,
but not all, of the injunctive relief it seeks under this paragraph, then
Quaker shall make an election. It may either accept the injunction and
proceed as specified in subparagraph (ii) above, or it may elect to
voluntarily vacate and/or not enforce the injunction, in which event it
shall have no obligation to resume paying Xxxxxxxx under paragraph 1(A), nor
to pay withheld amounts.
iv. If a court entirely declines to enforce paragraph 5 of this
Agreement or holds it invalid or void, then Quaker shall have no further
obligation to pay Xxxxxxxx under paragraph 1(A), including sums withheld
while litigation was pending.
v. If a court holds that the provisions of paragraph 5 are
enforceable, but further finds that Xxxxxxxx did not breach any of them,then
Quaker shall pay all amounts otherwise due under paragraph 1(A) that were
withheld,and shall resume making all payments required under paragraph 1(A).
vi. Xxxxxxxx shall have no claim for damages based on any delay
in the payments due under Paragraph 1(A) that results from a suspension of
payments or withholding in accordance with the preceding provisions;
PROVIDED, if payment of withheld amounts subsequently is required, then
along with such payment Quaker shall pay Xxxxxxxx interest at an annualized
rate of 6.0%.
vii. For purposes of this paragraph,litigation shall not be deemed
to have concluded, and no payment shall be due, until all potential appeals
by all parties are waived or exhausted.
E. Recitals: Xxxxxxxx stipulates and represents that the following
facts are true, and further understands and agrees that they are material
representations upon which Quaker is relying in entering into this
Agreement:
x. Xxxxxxxx has been Senior Vice President - Finance and Chief
Financial Officer for several years, and in that capacity has been a member
of Quaker's Senior Leadership Team and Operating Committee. In these
positions, he participated in forming and/or was informed about the details
of operational plans and strategic long range plans for all of Quaker's
businesses. Without limitation, he has detailed knowledge financial plans
and data, business plans, new product development, pricing structure,
marketing plans, sales plans, distribution plans, and supply chain plans for
all of Quaker's products. This is: (1) information Xxxxxxxx gained by virtue
of his employment at Quaker; (2) highly confidential and secret information
from which Quaker derives economic value, actual or potential, from its not
being generally known to other persons outside Quaker who might obtain
economic value from its disclosure or use;(3)information known within Quaker
only to key employees and those who need to know it to perform their jobs;
(4) information regarding which Quaker has taken reasonable measures to
preserve its confidentiality; (5) information that could not easily be
duplicated by others, and which Quaker required considerable time and effort
to develop; and (6)information which is likely to remain valuable and secret
for at least three years.
ii. By virtue of his employment at Quaker, Xxxxxxxx has developed
personal and business relationships with existing Quaker employees, which he
otherwise would not have had. By virtue of his position as Quaker's most
senior financial officer,he also has acquired detailed knowledge as to which
existing Quaker employees are critical to Quaker's success and future plans,
and which ones have skills or contacts that would be valuable to a
competitor.
6. Advance Determination of Permitted/Prohibited Conduct
Xxxxxxxx may request an advance written determination from Quaker's
Chief Executive Officer as to whether taking a proposed action or job would,
in Quaker's opinion, constitute a breach of this Agreement. In that event,
and provided that Xxxxxxxx discloses in writing all material facts about the
proposed action or job, Quaker shall make a reasonable effort to respond to
Xxxxxxxx'x request for an advance written determination within ten (10)
business days after receiving it; PROVIDED, that if circumstances materially
change after the advance determination is made (e.g., if the duties of a job
change after Xxxxxxxx accepts it), the determination may be reconsidered and
revised or reversed upon thirty days advance written notice to Xxxxxxxx.
Quaker shall treat as confidential any non-public information Xxxxxxxx
communicates as part of a request for an advance determination.
7.
Choice Of Law And Forum; Attorney Fees
A. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois, without giving effect of
choice of law principles.
B. In the event of any litigation over this Agreement or an alleged
breach thereof, Xxxxxxxx consents to submit to the personal jurisdiction of
any court, state or federal, in the State of Illinois. The parties agree
that the Illinois courts, state or federal, shall be the exclusive
jurisdiction for any litigation over this Agreement or an alleged breach
thereof.
C. In the event of litigation between Xxxxxxxx and Quaker regarding
any provision of this Agreement, the party which prevails in such contest
shall be entitled to receive from the other party, in addition to any
damages, injunction, or other relief awarded by a court,reimbursement of all
litigation costs and expenses, including reasonable attorney fees, which the
prevailing party reasonably incurred as a result of such litigation, plus
interest at the applicable federal rate provided for in 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended. If,in a particular contest, each
party prevails on one or more issues, the court shall exercise its
equitable judgment to determine which, if either, should be considered the
prevailing party and the percentage of that party's expenses which should be
reimbursed, taking into account inter alia the significance of the issue(s)
on which each party prevailed and the reasonableness of each party's
position(s).
8. Full Agreement
This written document contains the entire understanding and agreement
of the parties on the subject matter set forth herein, and supercedes any
prior agreement relating to these matters. No promises or inducements have
been made other than those reflected herein, and no party is relying on any
statement or representation by any person except those set forth herein,
including without limitation oral or written summaries of this Agreement.
This Agreement cannot be modified or altered except by a subsequent
written agreement signed by the parties, and only Quaker's highest ranking
Human Resources officer or his direct superior shall have authority to sign
such an amendment on behalf of Quaker.
Without limitation, nothing in this document shall eliminate or reduce
Xxxxxxxx'x obligation to comply with the Quaker Oats Code of Ethics, to the
extent that certain provisions in the Code (such as non-disclosure rules)
remain applicable to employees after termination. Likewise, nothing in this
document shall eliminate or reduce Quaker's obligation to indemnify Xxxxxxxx
in certain situations, pursuant to Quaker's by-laws or applicable law.
9. Severability
Each term of this Agreement is deemed severable, in whole or in part,
and if any provision of this Agreement or its application in any
circumstance is found to be illegal, unlawful or unenforceable, the
remaining terms and provisions shall not be affected thereby and shall
remain in full force and effect, except as expressly provided below.
Unless Quaker consents, the provisions in paragraph 5 of this Agreement
are not severable from each other or from Paragraph 1(A). If any provision
or aspect of paragraph 5 is held invalid, illegal, unlawful or unenforceable
in litigation between Xxxxxxxx and Quaker, then there is no consideration
for payments under paragraph 1(A); PROVIDED, if any provision in paragraph 5
is invalid or broader than the law allows, a court is authorized to award
the broadest injunctive relief permitted by law, and Quaker shall thereafter
make its election pursuant to paragraph 5(D)(iii) - if Quaker elects to
accept the limited injunctive relief, then it shall consent to sever the
invalid provision(s). Quaker's consent to sever one or more provisions in
paragraph 5 may be given at any time: before, during, or after litigation,
in Quaker's sole discretion.
The Quaker Oats Company
/s/ Xxxxxx X. Xxxxxx
By one of its officers
Xxxxxxxx has been advised in writing, via this notice, to consult with an
attorney before signing this Agreement. He acknowledges that he originally
received it on November 19, 1998; subsequently, after Xxxxxxxx consulted
with his attorney, several revisions were made at his request, and he was
given a revised draft containing those changes. Xxxxxxxx understands that
he has twenty one (21) days from November 19, 1998 to consider and decide
whether to sign the Agreement, and that he may revoke the Agreement within
seven (7) days after signing it. Xxxxxxxx further understands that he has
the right to request a different waiver, release and separation agreement,
which contains shorter non-compete, anti-raiding and non-disclosure periods.
Execution of such a document would satisfy the Program's prerequisites and
entitle him to Program benefits, but would not entitle him to the additional
benefits provided under this Agreement, nor entail the additional
obligations. Xxxxxxxx affirms that he has carefully read and fully
understands all provisions of this Agreement, that the consideration he is
receiving is fair and adequate, and that he has not been threatened or
coerced into signing it.
November 25, 1998 /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
